American Ins. Co. v. Hays

• Decision Date: 11 July 1927
• Docket Number: (No. 148.)
• Citation: 296 S.W. 724
• Parties: AMERICAN INS. CO. OF NEWARK, N. J., v. HAYS.
• Court: Arkansas Supreme Court

Page 724

296 S.W. 724

AMERICAN INS. CO. OF NEWARK, N. J., v. HAYS.

(No. 148.)

Supreme Court of Arkansas.

July 11, 1927.

Appeal from Circuit Court, Ashley County; Turner Butler, Judge.

Action by W. H. Hays against the American Insurance Company and another. From a judgment for plaintiff, defendants appeal. Affirmed.

Compere & Compere, of Hamburg, for appellants.

Y. W. Etheridge, of Hamburg, for appellee.

WOOD, J.

This is an action by W. H. Hays against the American Insurance Company, of Newark, N. J., and the Fidelity & Deposit Company, of Maryland, on a fire insurance policy issued by the insurance company on November 3, 1924, insuring the plaintiff's residence in the sum of $1,000 and his barn in the sum of $300. The insurance company will hereafter for convenience be called company. The residence of plaintiff at the time was occupied by the plaintiff, and the buildings (residence and barn) were situated on a farm three miles from Hamburg, Ashley county, Ark. The policy insured the property for a period of five years. The first premium of $21.60 was paid when the policy was issued and the succeeding annual premiums were to be paid on the 1st of November of each year thereafter until November 1, 1928. On September 16, 1925, the plaintiff wrote the company that he was then living in St. Louis and requested the company, when the premium was due, to send him notice at No. 1268 Delaware avenue, St. Louis, on September 23, 1925, the company wrote the plaintiff that his note for $21.60 would be due on November 1, 1925. On October 24, 1925, the plaintiff sent his check for $21.60 to the company. On October 29, 1925, the company wrote the plaintiff, acknowledging receipt of the check for $21.60 for premium due November 1, 1925, and stated that if he had rented his farm he would have to pay an additional premium per annum therefor of $2.32, making the annual premium $23.92. In this letter, as well as in the letter by the company to plaintiff of November 13, 1925, the company tells the plaintiff that if he had a tenant occupying the property, he would have to pay the additional premium specified, and further states:

"If a man pays his premiums he certainly wants protection, and we do not want you to do anything to violate the terms of policy contract without our consent."

On November 14, 1925, in answer to these letters, the plaintiff wrote notifying the company that he had a tenant occupying the property, and stated:

"I understand from your letter that I am to pay an increase of $2.32 on the next installment due November 1, 1926, which I expect to pay if I am not occupying the property myself and still own the same."

On the 17th of November, 1925, the company wrote the plaintiff inclosing permission to occupy the property by tenant, specifying the extra premium of $6.96 to be paid therefor and requested the plaintiff to attach the same to his policy. On December 4, 1925, the plaintiff wrote the company as follows:

"I just received notice that my tenant whom I had on my place at Hamburg, Ark., moved out yesterday. Since I don't think I can get my business arranged to get another in there before about the 20th of January, 1926, I am asking you if you will issue me a vacancy permit till that time."

On December 7, 1925, the company wrote the plaintiff as follows:

"In reply to your favor of the 4th instant, will say that we cannot grant vacancy permit, so if you will return your policy to us we will cancel the same, pro rata, and return your note and whatever amount cash that may be due you. Thanking you to let the policy come forward at once," etc.

On December 9, 1925, the plaintiff wrote the company as follows:

"I just received word that my house burned and all other buildings were destroyed by fire Monday night last, the night of December 7, 1925, so I think my policy covering house and barn is due."

Plaintiff gave the number of his policy. He again wrote the company on December 21, 1925, to the same effect, stating that he had notified the company of the destruction of his property by fire and that he had not had any reply to his letter, that the policy was due, giving number of same. On December 22, 1925, the company wrote the plaintiff, saying:

"The matter with reference to the above policy was referred to our special agent, Mr. Oscar Dillehay, Hall building, Little Rock, Ark., who, no doubt, will give attention to the same at his earliest convenience."

On January 7, 1926, the plaintiff wrote to Dillehay, stating that he had written to the company notifying it of the fire and loss about a month previous and had received an answer on December 22, 1925, stating that the company had referred the matter to him as special agent, and requesting him to send the plaintiff blanks for proofs of loss, concluding the latter by the following:

"I will send the proof and estimate to you as I would like to have an early adjustment so I can build."

On January 20, 1926, the company wrote the plaintiff, stating, in substance, that its agent had visited the premises and found that the property was vacant "and had been vacant for some time." This letter concluded as follows:

"We refer you to the terms and conditions of your policy without waiving any terms and conditions policy and reserving all rights under terms of the policy, and neither admitting nor denying liability."

On January 22, 1926, the plaintiff wrote the company inclosing the plans of the buildings and cost of same, and requested the company to give him a definite answer in the matter. On January 26, 1926, the company answered, saying:

"I can only refer to the terms and conditions of your policy without waiving any of the terms and conditions of the policy."

After this letter, the plaintiff sent in his proof of loss about January 26, 1926, and on the 2d of February, 1926, wrote the company stating that he had written it four times previously and that the company had ignored his letters, and notified the company that unless he heard from it in a short time he would put the matter in the hands of his attorney. This letter closed the correspondence.

The company is a member of the Fire Prevention Bureau, which is a rating bureau for fire insurance companies in Arkansas, one of the rules of which is that when permission is given for premises to become vacant, by reason of the increased hazard by reason of such vacancy or unoccupany, one-third of the insurance is suspended, and in case the property is destroyed by fire, through such vacancy, the company would be liable for not exceeding two-thirds of the amount of the insurance. The policy and a certified copy of the bond for the prompt payment of all claims with the Fidelity & Deposit Company, as surety thereon, were made exhibits to the complaint.

The plaintiff instituted this action and set up the policy, alleged a compliance on his part with its provisions, and prayed judgment for the amount of the policy in the sum of $1,228.24, less the premium notes. Plaintiff also prayed for penalty and a reasonable attorney's fee.

The defendant answered and denied formally the allegations as to the destruction of the property, and denied specifically that the plaintiff had complied with the terms of the policy as to notice and proof of loss, and that defendant had waived any proof of loss, and alleged that the plaintiff had wholly failed to comply with the terms of the policy, and therefore denied any liability on the policy and on the bond of the Fidelity & Deposit Company.

The policy, among other things, contains this provision:

"If the risk be increased in any manner, or if any change takes place in the title, possession, or interest of the assured in the above-mentioned property, * * * or if any of the above-mentioned buildings be or become vacant or unoccupied without the consent of an officer or the Southern Farm Department Manager of this Company indorsed hereon, then, in each and every one of the above cases, this entire policy shall be null and void."

The cause was by consent of parties submitted to the court sitting as a jury upon the above issues and facts, and the court rendered a judgment in favor of the plaintiff against the defendants in the sum of $1,228.24, the amount due under the policy, with interest, and 12 per cent. penalty and an attorney's fee in the sum of $250, from which judgment is this appeal.

1. It will be observed that the policy provides that if any change takes place in the possession of the property without the consent of the insurance company the policy should be null and void. The policy and the correspondence between the appellee and the insurance company show that the appellee, after issuance of the policy, changed possession of the property without the consent of the insurance company. It appears from the policy that W. H. Hays insured his dwelling house, situated within 3 miles of Hamburg, Ashley county; his address in the policy is Hamburg, Ark., and his letter to the company of September 16, 1925, states he was then living in St. Louis. There is nothing in the record to show that, up to this time, he had obtained the consent of the company to change possession of the property, and if the company had then declared a forfeiture of the policy, it would have been entitled thereto under the express terms thereof; but the company clearly waived this right to a forfeiture of the policy by its letters to appellee of October 29, 1925, and November 13, 1925, and November 17, 1925, which show that the company consented to the occupancy of the property by tenant and accepted appellee's promise to pay the company an increase of $2.32 on the annual premium in consideration of the permission granted by it for appellee to have the premises occupied by tenant. We cannot therefore agree with learned counsel for the appellants in their contention that the appellee has not paid anything for the tenancy permit and...